Pokémon Go – A game changer for marketers?

Have you caught your Pokémon yet? Pokémon Go – the mobile application-based game – is immensely popular. The game uniquely uses Augmented Reality technology. It has succeeded in growing its user base beyond just fans of the Pokémon comic. With the ability to drive foot traffic to stores, the app has created a new and potentially powerful platform for companies . Clocking in 7.5 million downloads since its debut in the U.S. on July 2016 , is the app a marketer’s boon – or is it destined to become just another “has-been” fad?

What is Pokémon Go?

Taking gamification to the next level, Pokémon Go is a gaming application based on the concept of augmented reality (AR) to deliver a real-life Pokémon experience.

Released in July 2016, the game was developed by Niantic Labs and published by the “father” of Pokémon, Japanese company Nintendo. Using Augmented Reality technology similar to Google Maps, players need to find Pokémon characters at random physical locations and capture them via the phone’s camera.

Pokémon actually combines the words ‘Pocket’ and ‘Monsters’, reminiscent of the craze when the Pokémon games were first released in 1996 on Nintendo’s Game Boy. The sense of going out and hunting Pokémon continues to captivate players.

Gaming psychology in play

Pokémon creator Satoshi Tajiri’s work has spawned a giant in gaming. The Pokémon eco-system includes card games and television shows.

Using games to lure consumers is nothing new for businesses. From Cracker Jack (a brand of caramel coated popcorn) launching toy surprises in boxes in 1912 to McDonald’s Happy Meals with toys today – businesses look to drive profits through play.

Pokémon Go provides a playing experience that allows users to rack up rewards. The more players have a positive feeling about playing the game, the more likely it is to increase loyalty and hence business potential.

Pokémon creator Satoshi Tajiri’s work has spawned a giant in gaming. The Pokémon eco-system includes card games and television shows.

Up until the arrival of Pokémon Go, handheld experiences were isolated. Pokémon broke down those barriers by allowing players to face off against, or trade with, their friends.

What common gaming tactics can businesses adopt to boost revenue with an app like Pokémon Go?

Sponsored locations?

Pokémon Go has driven more than 500 million store visits, thanks to 35,000 sponsored locations live within the app.

The first viral use of augmented reality, Pokémon Go has driven more than 500 million store visits, thanks to 35,000 sponsored locations live within the app, spanning industries from telecom to coffee.

For instance, the Indian wireless telecom provider Jio has sponsored 2,000 locations nationwide, with another 7,000 to be added by the end of 2017.

Local marketing

In-app purchases such as Lures attached to a Pokéstop attract Pokémon users to a specified spot.

Pokéstops and Gyms can be found all over different locations. Pokéstops are tagged spots where essential items for Pokémon battling and catching are found. Gyms are locations where friendly Pokémon battles are fought, which means businesses can generate more traffic with little effort.

Furthermore, in-app purchases such as Lures attached to a Pokéstop attract Pokémon users to a specified spot. Many small businesses have found themselves close to a Pokéstop, especially bars, restaurants and retail stores that rely on footfall – opening up another opportunity to attract customers and generate revenue.

For instance, Huge Café – a coffee shop in Atlanta – purchased Lure credits worth USD49 (in July 2016) to ensure more customers at the shop, since it is located between two Pokéstops.

Demographic profiling

Marketers also use the game app to target specific audiences with services and offers in a similar geographic and demographic space.

In July 2016, Virgin Gym in London announced Pokémon workouts, where groups are led by trainers along a specified route to catch pocket monsters during interval training.

Similarly, a leading wireless network service provider in the U.S. – T-Mobile – is offering unlimited data for Pokémon users until August 2017, along with a lucky draw to win prizes that are Pokémon themed.

Commercial impact on Nintendo?

High expectations of profits for parent company Nintendo from the Pokémon Go phenomenon led to a 25 per cent surge in its share price to reach USD222.16 in July 2016. This pushed Nintendo’s market capitalization above USD30 billion.

The game topped app download charts in July 2016 in countries such as Australia, New Zealand and the USA. Five percent of all Android smartphones in the U.S. already have the Pokémon Go app installed.

However, the game was not exclusively created by Nintendo. The app was created by Niantic, an augmented reality game maker, in October 2015. Niantic built Pokémon Go with the Pokémon Company as a collaboration.

Both Niantic and the Pokémon Company receive around 30 percent of Pokémon Go’s revenue. The app is free to download and the revenue is generated via in-game micro transactions.

Challenges ahead

The growing craze to “catch ‘em all” can become hazardous. What challenges should players consider?

Data security risks

If compromised, the app-based game could infiltrate cloud platforms used for data storage or corporate systems. Even if the official application poses no risk, users might download malware from infected games or sites.

There have also been surges in malware versions that are distributed online through unofficial and official stores – even on Google Play – especially in countries where the app is due for a launch.

Game-related accidents

Apart from IT security risks, one of the biggest risks is physical harm to the players. Since players need to physically go out in search of Pokémon characters in real-world locations, players at times compromise on attention to their real-world surroundings.

Players have even stumbled upon strange locations such as graveyards and caves. For instance, two men in San Diego (in July 2016) fell off an ocean bluff while trying to catch a Pokémon.

Battery drainage

While playing the game, a phone’s screen, camera and the Global Positioning System (GPS) are crucial and cause significant battery drain. Although there are temporary solutions to these issues, players are advised to fully charge phones before looking for those Pokémon.

What lies ahead?

Pokémon Go has helped draw attention to the AR industry, which will be valued at USD5.7 billion by 2021. The estimated number of Pokémon Go downloads in 2016 was 500 million. The game can truly be said to have brought AR to the masses by enabling players to interact directly with virtual environments in the real world via a tablet or phone.

Large companies are now keen to explore market investments for AR enabled game developments and releases. Established in 2011 , Magic Leap received investments worth USD1.39 billion (in 2016). It further plans to construct a device similar to Google Glass to seamlessly blend the real world with computer graphics.

Gamified AR technology is a great platform to which marketers can attach promotions and advertising. The use of Pokémon Go Lures to promote store locations showed one way that can be done.

However, the effectiveness of such platforms is only as good as the appeal of the underlying game. The popularity of app-based games often sees a sharp rising curve followed by an equally sharp downward curve as interest wanes and the halo of novelty evaporates. While Pokémon Go has yet to reach every country and still has a long way to “Go”, it is far from clear if other AR-based games can shake the world as Pokémon Go can reasonably claim to have done.